We need more than the entire NHS budget to plug the serious pensions black hole

Britain must make more cuts and bring in “crippling” tax rises to be able to pay for future pensions, warns the Institute of Economic Affairs.

The government would need to cut spending by more than a quarter – the equivalent of the entire NHS budget – or increase taxes to meet the demand from pensions and healthcare in the future for an aging population.

More than £300bn is needed, which is 17% of GDP. This would mean a tax increase of 38% to 55% of national income.

“Without significant changes to spending levels, huge sacrifices will have to be made by future generations either through significantly higher taxes or reduced benefits,” the report said.

The IEA’s programme director Philip Booth said these tax increases would be “impossible” to implement “without choking off economic growth and actually reducing tax revenues.

“We have never been in a situation like this before. It is quite possible that we will not find our way through without serious social breakdown and/or mass emigration of the most mobile and productive people,” he added.